What is Proof of Stake and Proof of Work?

posted byMeruem

March 9, 2019

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So, you want to know more about proof of work and Proof of stake. Both these models are known as the consensus mechanism. These are required to confirm the transactions made on the blockchain without taking the help of a third party. If you want to know more about these mechanisms, you can go through the following article. It will explain all the details to educate your mind and enable you to take the right decision.

What is Proof of Work?

Proof of work is a computer algorithm that is used in cryptocurrencies that include Ethereum, Bitcoin, and Litecoin to reach at a consensus about adding a particular block onto the blockchain. Hashcoin is the function of the proof of work that Bitcoin investors use to resolve computationally math problems to add blocks onto the blockchain. It offers specific data that can be used to validate that a sizeable amount of work has been done. Proof of work is considered more effective since it offers a single piece of data that will fit well to the Bitcoin protocol.

Are you still a bit confused? Do you want more details? If yes, then go through the followings to clarify your doubts with examples.

If you want to mine a block successfully, you will have to hash the block’s header in a manner that it will be equal or less to the target.

The target is the SHA-256 hash needs to have a 256-bit alphanumeric string and should start with eighteen zeros. The target will keep changing depending on the change in the difficulty in every 2016 blocks.

You will arrive at the particular hash by varying with a small part of the blocker’s head that is called nonce. In addition, a nonce is always expected to start with 0 and it will be incremented each time for attaining the required cash.

As the varying of the nonce decides the miss and hit, the possibility of getting this particular hash that normally starts with zeros is low. So, it is suggested to do many attempts to get the desired result. It will demand a lot of hardware resources and computational power to ensure that the large amount of the work has been done before planning to mine any individual block. The entire procedure is called proof of work.

What Is Proof of Stake?

Proof of stake is used as an alternative to reach a consensus. In 2012, proof of stake was proposed by a Bitcointalk forum user. Proof of Stake is a bit different from the proof of work. Proof of work demands a lot of energy and electricity. You might feel it is a waste of resources to mine a single block.

Some study reports prove that maintaining and running a poof of work is as expensive as offering power to millions of U.S. homes. If you are looking for the best alternative, you can consider proof of stake.

Proof of stake is user-friendly. In this consensus model, your stored number of coins will matter. With the more number of stakes, there will be higher chances of not breaching the system.

In the proof of stake, the blocked are not mined, unlike the proof of work. Rather, the blocks are minted or forged. Once you have the significant stakes in the system, you will be allowed to use pseudo-randomly to forge and add blocks onto the blockchain.

The pseudo-random selection is made after analyzing different factors to make sure that people with higher stakes are not selected only. Others people should be selected as well. Some factors that play an important to select pseudo-random are coin age-based selection, randomized block selection, master nodes.

Proof of stake is normally applied to the pre-mined cryptocurrencies to enable users to access to coins for the staking. That means Proof of stake cryptos are fixed from the beginning without forging or blocking reward, like proof of work. However, the proof of stake forgers will get a transaction fee attached to that block.

Both Proof of work and proof of stake have positive and negative sides. When proof of stake is considered cost-effective and environmentally friendly proof of work rewards miners who solve the mathematical problems by helping to create new blocks.

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